1. Political – Economic Interactions: Acemoglu and Robinson’s Extractive and Inclusive Institutions Why nations fail: Geography hypothesis Culture hypothesis Ignorance hypothesis  Prescriptions Authoritarian growth Modernization Theory – Stages of Growth Washington Consensus

2. Washington consensus: 1. Fiscal policy discipline; 2. Redirect public spending away from subsidies and toward pro- growth, pro-poor services (education, health, infrastructure investments; 3. Tax reform – broadening the tax base and adopting moderate marginal tax rates; 4. Interest rates that are market determined and positive (but moderate) in real terms; 5. Competitive exchange rates: neither fixed nor free-floating; 6. Trade liberalization ; 7. Liberalization of inward foreign direct investment; 8. Privatization of state enterprises; 9. Deregulation… except prudent oversight of financial institutions; and, 10. Legal security for property rights.

3. Extractive Institutions  Vicious Circles Why Nations Fail: Institutions Hypothesis Economic institutions Insecure property rights Slavery Plantation system Encomienda Mita/Repartimiento Monopoly La Serrata Dual economy Crony capitalism Marketing boards Political institutions Absolutism Infighting Failed state Ethnic fractionalization Iron Law of Oligarchy Elites Libro d’Oro Indirect rule Patronage networks “Redemption – Jim Crow Apartheid Status Quo

4. Inclusive Institutions  Virtuous Circles Why Nations Fail: Institutions Hypothesis Economic institutions Enforced property rights Patent protection Rule of law Open Markets Commenda Political institutions Pluralism Constraint on executive Secret ballot Free media Muckrakers Creative Destruction (pursuit of transient rents)

5. Transition to Inclusion and Growth Critical junctures Disrupt existing institutions Open opportunities... Seize opportunities!... Contingency Critical junctures in Acemoglu and Robinson’s “history” Neolithic revolution Fall of Rome Black plague Atlantic trade Glorious Revolution Industrial Revolution French Revolution Colonialism World War I Post-colonialism Black empowerment Mao’s death Ideas as Critical Junctures Christopher Columbus Isaac Newton/Enlightenment Benjamin Franklin/Adam Smith John Locke/James Madison Vladimir Lenin Maynard Keynes/Friedrich Hayek Martin Luther King, Jr.

6. Transition to Inclusion and Growth Institutional drift  small differences – Disease environment Critical junctures – Reversal of fortune Centralized state Pluralist coalition